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Income Sharing
What is Income Sharing? Income sharing is a way of organizing a community's finances. There are two important starting assumptions with income sharing: # Most or all of the income generated either by community-owned businesses or by individual efforts will be put directly into the community's income pool, and the community as a whole decides how to spend it. # The community assumes responsibility for meeting the needs of individual members, as well as providing some amount of amenities. The practice of income sharing is directly related to the first two FEC principles, that each member community: ' # Holds its land, labor, income and other resources in common. # Assumes responsibility for the needs of its members, receiving the products of their labor and distributing these and all other goods equally, or according to need. '''In income sharing, the finances of the members are collectivized completely or to a large degree, and members give up individual control over most of their finances. Most or all income is pooled, and the community as a whole decides how to organize its finances and how money is spent. How is income sharing different from other models? Most communities do not practice income sharing, instead practicing what could be called expense sharing. In expense sharing, individuals retain control over their finances. The group decides which expenses it is going to meet collectively. Usually these are things like mortgage payments or rent, utilities and other expenses related to shared facilities, cleaning supplies, and in some cases toiletries and some amount of food. Members pay for their share of these expenses, either equally or according to use (e.g. it’s common in collective housing for rent to be based on the size of your room). There is usually a buy-in, deposit, or member share that entitles individual members to access the common facilities, and some kind of dues, rent, and/or other fees that cover the ongoing expenses of the shared assets. In most cases there’s both a money and labor component to this. Members pay a certain amount as well as contribute some number of hours per week or per month. How does income sharing work? There's a variety of ways to practice income sharing, and each FEC community has a somewhat different system. Click the community below for a detailed description. In general, the finances of an income sharing community could be managed similarly to a business. In most cases there will be a single bank account and central bookkeeping. Whatever legal entity the community is operating under will need to file a tax return. Usually communities will use the Cash method of Accounting as opposed to the more complex Accrual method, which is generally used for businesses that keep large amounts of inventory or materials in stock for more than a year at a time. There's a key difference between the income sharing systems of communities that get most of their income from businesses run by the community and those that get most of their income from individuals working jobs or running their own businesses. Another important difference between systems is how communities deal with what is sometimes called allowance, stipend, or discretionary funds (DF), and the extent to which members are allowed to earn money that does not need to be pooled and the rules for how that money can be spent. Income sharing models by community Twin Oaks Twin Oaks has a dual economy. The community generates income through producing and selling tofu, indexing books, weaving and selling hammocks, and growing and selling seeds. Members receive an individual stipend of $90 per month. The rest of the income is spent on communal goods, improvements, and services. Sandhill Farm Sandhill has a unitary economy. The community generates its income through a variety of sources, including both on-farm and off-farm work. On-farm work including the processing and sale of sorghum syrup and delicious mustard. Off-farm work includes organic inspection, furniture-making, and more. Members' income is deposited into the communal account and decided through informal decision making how it will be spent, each member having discretion to spend funds on smaller purchases. East Wind East Wind has a dual economy. The community generates income through its nut butter business, East Wind Nut Butters. Members work at the on-location factory to produce and sell East Wind's Nut Butters. The income is spent on communal projects, with each member receiving a stipend of $150 per month. Acorn Acorn has a dual economy. At Acorn Community, income is almost exclusively generated through the shared business, Southern Exposure Seed Exchange, though occasionally (and at the inception of the community) communards work off of the farm, generate income, and deposit it into the communal pot. Acorn endeavors to use its income to meet all of its members and residents' basic needs, and for things beyond basic, Acorners each receive a monthly stipend of $75, usually used for consumables like alcohol, cigarettes, etc. Beyond that, income is budgeted by the group for areas of expected expenditure, for example business costs, infrastructure improvements, food, clothing, recreation, etc. The Midden? Sapling? Compersia? Dual vs. Unitary Economy Communes generally can be said to either have a dual or a unitary economy. Dual economies maintain some amount of personal money for each member (allowance), whereas as unitary economies keep all money in common. Dual Economy Most income sharing communities use a dual economy, meaning that members have some amount of personal money. A community's dual economy is split into the common economy of collectively held funds and they private economy of personally held funds. The basic needs of a dual economy community and its members are met through the common economy. Food, tools, maintenance supplies and the like are purchased out of collectively held funds. However, there are certain items (usually "vices" such as tobacco, alcohol, candy, junk food, etc.) that are may not be purchased with common money. Instead, each member is granted a certain amount of personally money ("allowance") each month, which they use for their own discretionary spending. In this sense, each member has a small private economy outside of the community's common economy, creating a so called "dual economy" Unitary Economy Some communities, particularly smaller communities, have unitary economies, meaning that no member has private funds. All money in a unitary economy is commonly held by the community. As opposed to communities with a dual economy, these communities will fund community members' needs and wants out of the common economy. Discretionary spending by individual members may be subject to some type of approval process, but often members can do some discretionary spending without needing to consult the group. Why share income? There are various practical and philosophical reasons to practice income sharing. There are also drawbacks given the challenges of incorporating a community's economy into the mainstream capitalist economy, given the differences in practices and values at play. Benefits to income sharing Practical Income sharing in conjunction with resource sharing can lead to a reduction in the amount of income per member necessary for the members of the community to lead a comfortable lifestyle (according to whatever lifestyle choices they make). This means that the amount of time the average member spends earning income is usually much less than the conventional 40 hrs per week. Resource sharing can also lead to a reduction in material consumption per capita for members of a community, as well as a reduction in percentage of material consumption that is wasted, translating to a reduced ecological impact. Through sharing, reusing and buying in bulk, it is possible to reduce purchase and corresponding waste of food, packaging, clothing, etc. A resource sharing community can reduce their consumption of just about every resource by sharing tools, transportation, and a multitude of other commodities that are typically purchased and used by individuals. Income sharing also supports the development of a labor system, by which the community decides the range of activities it will devote it's time to beyond income production. (For a discussion and examples of labor systems in income sharing communities, click here yo.) Labor systems in income sharing communities allows some members to earn less than others and do other things that are beneficial for the community. Labor systems allow the work of those doing domestic tasks, activism, community projects, etc. to be valued equally to the work of those producing income. One of the key words in "income sharing community" is "community." Many people who join income sharing community find a sense of solidarity and community among each other that can be difficult to find in a mainstream way of life. Sharing money truly creates interdependence among a group, such that the wellness of one member of the group is a concern of all members of the group. By sharing income, as a nuclear family does, income sharing communities can provide a sense of family. In communities that earn income through cooperatively run businesses, this sense of solidarity can be added to by the fact that members of the community also "go to work" together. Sharing income also can also magnify the impact of a community, insofar as a community agrees upon the values it holds most importantly when making decisions. When a community spends their money and energy in a concerted way according to community values, those values are manifested in the world more strongly than would be possible individually. This is a practical advantage in the philosophical pursuits underpinning income sharing. more nice things Philosophical Income sharing is a lifestyle that fundamentally holds cooperation as a central value. Sharing income offers an alternative to the hyper-competitiveness that has become normalized in western society. It challenges the assertion that competition is essential in a functioning society by designing a working culture that replaces competitiveness with cooperation as completely as possible. Communities that share income reveal that competition does not need to be central in a successful and happy life. The centrality of cooperation in income sharing community also offers a life full of solidarity, camaraderie and friendship that is not easily found in mainstream society. Income sharing supports the philosophy that community is a central part of a happy and successful life, and shows that a life built around community is one that can work. Centering cooperation instead of competition is one piece of a bigger philosophical struggle manifest in income sharing: the search for a new economy. The sum of many of the practical advantages of income sharing is a novel economy, which is both a practical and philosophical pursuit. Income sharing reveals the possibility of an economy that could succeed capitalism, and calls into question the assumption that capitalism is the only possible economy in our world. Income sharing, if scaled up, holds the possibility of an economy in which all citizens can be fed, clothed and housed by appropriately assigning excess, which would also reduce wastefulness. It reveals the possibility of an economy in which each person can live a good life on less work than we currently perform, not needing to work meaningless jobs to support themselves. As such, it reveals the possibility of eliminating "busy work" jobs and empty-minded consumption that do not produce sustenance or happiness, which also promises to further reduce wastefulness. Income sharing and the possibility of a new economy it provides also allow for reconsideration of which work is "valuable." Sharing earned income among an entire community allows some members to focus on work that does not produce money, but still receive the same quality of life as those doing income producing work. A community can decide fore itself which labor it values the most, or aim to value all work as equally as possible. Income sharing offers and opportunity to create a world where domestic labor, community projects, emotional support, self reflection, etc. can all be valuable forms of work. Challenges with income sharing Sharing income binds members of a community to each other financially, which can require sacrificing a certain degree of personal freedom. In the case of members that have different lifestyle preferences, it may also lead to an unequal distribution of resources according to personal preference, which may be cause for tension. Next level income sharing Income sharing requires a greater degree of sharing than expense sharing, since all or almost all money members of income sharing communities make is turned over to the community, whereas members of expense sharing communities continue to accumulate privately held income. It is possible to introduce a degree of sharing even greater than that of income sharing by sharing assets and/or debts. A common example of this would the community's financial relationship to student loans. Most communities do not assume responsibility for debts such as student loans, and expect members to deal with their debts outside of the community's finances, according to whatever rules the community has about the use of personal assets. Likewise, most income sharing communities do not require members to turn over their savings upon joining, but instead only require that members not spend their savings as a member, or spend them in a limited way, such as to pay off debt. In non asset and debt sharing communities, a member's saved assets are what will allow them to transition to the next phase of their life when they leave the community. Members leave in essentially the same economic condition they arrived in. However, some communities do share assets and debt, meaning that members must turn over their savings to the community upon joining and that the community will take responsibility for a member's debt. Some such communities have rules about after what length of membership assets and debts become shared with the community. Rather than having members freeze their assets and leave the community with the same savings they arrived with, asset and debt-sharing communities often have something called a "leaving contract." Each member specifies in their leaving contract what resources they will need to successfully transition out of community when the time comes. Leaving contracts may specify a certain amount of money the member will leave with as well as certain resources and possessions they will take with them, such as a vehicle. Leaving contracts may vary from member to member, but there is a often a certain period of time members are assumed to be supported for in their leaving contracts. For example, a leaving contract policy may assume that members will be supported for their first six months of transition out of the community.